Legal Checklist to Protect Online Entrepreneurs

Labib Ittihadul from Flickr (Public Domain)

I was recently asked to create a list of what legal steps an entrepreneur should take if they operate solely online to protect their business. The person who asked appears to be primarily a YouTuber. Here’s the list I created for him: 

1. Consider having Two LLCs. One is a holding company for the intellectual property and licenses the IP to the other LLC to use it. This way if the holding company is sued for infringement, there are no assets to be collected if the holding company loses the lawsuit. We recommend this tactic for many businesses, not just online entrepreneurs.

2. Create an Operating Agreement if the LLC has more than One Owner.  Yes, this includes if you go into business with relatives, best friend, or romantic partner. This is a master document that lays out how the company will operate, each person’s obligations and responsibilities, and how the owners will address problems when they occur.

3. Move your Website to a Server Outside the U.S. The reason for doing is if there is ever a court order against the website, it will be more difficult to enforce if the website is house by a company outside the U.S. and not bound by U.S. law.

4. Register your Trademarks with the USPTO. So many legal issues could be minimized or avoided if every company properly registered their trademarks. This could include company names, product names, event names, logos, and slogans. When you have a registered trademark, you can stop a competitor from entering the marketplace while using a trademark that is confusingly similar to yours. If you have a strong international presence, it may be wise to register your trademarks in multiple countries.

5. Create a Copyright Strategy. Many professional content creators do guest posts for and collaborations with others and allow guest posts on their sites. It’s best to have contract templates for these situations that include clarification about who owns the copyright, what the other person gets, any limitations regarding the content, and an indemnification clause if appropriate.

Additionally, your copyright strategy should address when and how you can use others’ materials. You should have an understanding about fair use and where to look for materials that come with a license to modify the original as well as a license to use it for commercial purposes.

6. Consider Registering your Copyrights. You do not have to register your copyright to get your copyright rights, and you do not have to register everything you create; however, it’s beneficial to have the discussion about what you might want to register. You are required to register your copyright if you want to sue for infringement. Additionally, I frequently recommend registration to people who want to license or sell their copyrights.

7. Create an Action Plan for Addressing Suspected IP Infringement. Decide how you want to respond to suspected infringement before it occurs, so that you or your lawyer can be prepared to respond based on your desired outcome when it happens. Depending on how you want to respond, there may be things you need to do before the infringement occurs to best protect your rights.

8. Have a Contributor Contract Template. This is the contract you will use with people who contribute content to you, your site, your channel, or a social media account. It will state what rights each party has to use the content – most likely that they own it, and they grant you a license to use for certain purposes. It should also have an indemnification clause to protect you in the event you’re accused of violating another person’s IP rights or other legal wrong by using what the contributor provided to you.

9. Have an Influencer Contract Template. This is the contract to use when brands hire you so that the expectations on both sides are clear, and you state that you comply with FTC regulations. (You should probably have internal documents about FTC compliance as well.) Companies that hire influencers may have their own contracts that they want to use, but having your own template will help you analyze their contract to see how well it addresses your needs and concerns.

10. Create Website Terms and a Privacy Policy. These documents may need to comply with U.S. privacy laws, the Canadian Anti-Spam Legislation (CASL), and the General Data Protection Regulation (GDPR), and manage the expectations of visitors to your website. Many of the new privacy laws interfere with how many companies collect and use others’ personal information. These issues are complicated. Many people copy another content creator’s terms and privacy policy, but that could be a recipe for disaster if what you use is insufficient for your needs.

This may not be a complete or comprehensive list of legal steps to take to protect your business. It’s always best to consult a lawyer who understands the legal implications related to your business, preferably someone to specializes in business, intellectual property, and internet law. Hopefully this list gives you a place to start to evaluate your legal needs as a professional content creator or online entrepreneur.

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How to have an Anonymous LLC

Anonymous by Poster Boy NYC from Flickr (Creative Commons License)

Here’s the easy answer: You don’t.

It may be impossible to own an LLC anonymously. There’s always a paper trail and financial records that eventually lead to you.

Burying Your Identity in Your LLC
Creating an LLC requires paperwork and money. The Articles of Organization that are filed with the State are public records. If you didn’t want to have your name on your company, you set up layers of companies that own companies that own your LLC so it would take longer to trace it back to you. You could also set up a blind trust where you are the beneficiary. That would keep your name off the public records, but there would still be documents somewhere that show the connection. (Because business filing are public records, I often recommend that clients not use their home address as their business address. There are many low-cost mailbox services.)

Even if your name is not on the company as an owner, there would still be the records of payments to you. It may require a court order for someone to gain access to this information, but it would be telling if the majority of payments from the company (or companies if you ran it through multiple entities) went to a single person.

When someone asks how to be an anonymous owner of a company, it raises a red flag for me about their motivations and their business activities. If a company or person is controversial or engaging in potentially malicious acts, it may raise enough eyebrows that someone will be motivated to take a closer look at its inner workings.

How to Run a Website Anonymously
Conversely, it may be possible to operate a website relatively anonymously. You would have to essentially divorce yourself from the website:

  • Use an email address for the website registration that isn’t otherwise connected to you. Don’t access this email using your phone.
  • Pay for the website with a pre-paid credit card.
  • Use a web hosting service that protects your information.
  • Only access the website using public wifi. Never access it from work or home.
  • Turn off your phone when working on your website – so the GPS in your phone will be turned off.
  • Consider using an app that masks or mocks your GPS location when you access the internet.

Even when you take all the precautions to be anonymous online, be prepared to be unmasked at anytime. Whatever you say anonymous, you best be ready to own it once your name and face are attached to it.

If you want a resource regarding the legal dos and don’ts regarding posts on the internet, please check out The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you need legal help regarding internet privacy, you can contact me directly or a social media lawyer in your community. I post about these issues on TwitterFacebookYouTube, and LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Should your Child have a YouTube Channel?

Tire Swing by RichardBowen from Flickr (Creative Commons License)

Tire Swing by RichardBowen from Flickr (Creative Commons License)

I recently spoke at a family law conference on how to get usable evidence from social media. Afterwards, a woman approached me and said her 11 year-old child asked to have YouTube channel and several his friends already had channels. She wasn’t sure if she should let him and asked for my input.

Google Says No
The easy and obvious surface-level response to this question is Google (which owns YouTube) doesn’t allow anyone to have an account that is under 13 years old. (That’s the rule for all social media accounts in the U.S., by the way.) However, there’s nothing wrong with a parent creating a separate Google account to use with their child to create content for a YouTube channel.

Teachable Moments and Skill Development
My first response to the idea of a child having a YouTube channel, is that it’s a great opportunity to develop their skills – both as a content creator and as a person interacting with others online. Before letting the child create video content, have a serious planning discussion with them about what they want to create, their motivations for creating it, and what topics/language are off-limits. All these things should be written down; it’s good practice for creators to have a thoughtful for plan for what they want to create. You can help your child develop their video editing and copyright writing skills, as well as learn the rules about using others’ content and doing product reviews online that comply with the federal rules.

The parent(s) should review the child’s final draft of a video before it is uploaded to their channel to make sure they’re following the rules. This is an ideal opportunity to talk with your child about the potential long-term effects of a piece of content, and how they would react if they receive feedback from peers or teachers about it at school. Also, you want to decide in advance whether you will allow comments on your child’s videos. It may be prudent to turn these off, at least at first. Allowing your child to post content online comes with the responsibility of being mindful about who is trying to interact with them – either through comments, email, or direct messages.

Safety First
If you let you child have a YouTube channel, regardless of their age, be sure you’re monitoring both what they’re communicating to others (publicly and privately) and what others are saying to them. If they are under 18 years old, you should have the passwords to all their accounts and their phone so you can effectively and closely monitor what they’re doing online. The younger they are, the more oversight they need. Use effective software to monitor and protect your kids. Here’s some real-life advice from geek parent Susan Baier about her experience raising a geek child:

I also strongly recommend that you read the books by security expert Gavin de Becker, especially The Gift of Fear and Protecting the Gift. If you want a resource about the legal dos and don’ts about social media for yourself and your children, I suggest you read The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. The lessons in there apply to all social media platforms, including YouTube. If you want to connect with me and my thoughts about children using the internet, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Checklist for Social Media Influencers

Selfie Stick by R4vi from Flickr (Creative Commons License)

Selfie Stick by R4vi from Flickr (Creative Commons License)

Some people, including a lot of average joes, have such a strong social media following that brands want to send them free products to review or to partner with them for a native advertising campaign. If you are lucky enough to get such an offer, you need to understand the rules and read the fine print closely to make sure you’re not setting yourself up to be accused of an FTC violation. Don’t count on the other side to educate you. As we saw in the Lord &Taylor situation, companies who seek to partner with social media influencers don’t always know and follow the rules themselves.

If I were presented with an offer to do a product review or be part of a native advertising campaign, these are some of the questions I would ask in regards to the offer.

Influencer-Company Relationship
What is the company asking me to do?
What is the company giving me in return?
Is there fair give-and-take between both sides? (If not, it’s not a valid contract.)
Are expectations and deadlines clear?
Who is my point person at the company if I have any questions?

FTC Compliance
Does the offer require that my review be truthful?
Does the offer require me to give an accurate review of the product? (Bonus points for companies that require reviewers to write what they like and dislike about the product.)
Does the offer require that me to disclose my relationship with the company – both in my review itself and also any promotions I do about the content on social media (i.e., use #ad or #sponsored)? (The FTC requires this so if the company doesn’t want you to do this, turn and run. They don’t know the basic rules about native advertising.)

Intellectual Property
Does the offer clearly state who owns the copyright in what I create under the agreement?
By accepting the offer, do I grant the company certain rights to use my work?

General Legal Provisions
Is there a written contract? (It’s avoids confusion when all the provisions are in a single document and has  provision that states, all the terms of this agreement are in this contract.)
Is there a severability clause so if one provision is illegal, the rest of the contract remains in place?
What are the rules for modifying the agreement?
Which state law governs the agreement?
If there’s a problem between the company and me, how will we resolve it?
Under what circumstances will the agreement be terminated?

Final Words of Wisdom
Contracts are relationship-management documents, ideally written to protect both sides. If a company offers me a contract with provisions I dislike, I request changes. (I’m the queen of changing liability waivers.)

And if there’s a word or provision you don’t apprehend, ask! Don’t sign a contract that you don’t understand, because as long as it’s legal, you’re stuck with it.

If you are a serious influencer and get offers to do product reviews or participate in campaigns, treat your social media activities like a business. Consider hiring a lawyer to create a contract template for these situations when the other side doesn’t have a written contract. At the least, use this checklist to do a preliminary review of the offers you receive.

If you want more information about the legal rules regarding your blog and social media, please check out The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me about social media law, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that’s shared only with my mailing list, by subscribing to the firm’s newsletter.

Arizona’s New Revenge Porn Law

Bound by Connor Tarter from Flickr (Creative Commons License)

Bound by Connor Tarter from Flickr (Creative Commons License)

Arizona has rejoined the ranks of U.S. states that have criminal law against revenge porn. This bill was announced with much fanfare in January, but there was barely a whisper when Governor Ducey signed it into law earlier this month. And because this law was passed on an “emergency” basis, it became effective the moment it was signed.

The New Law
A.R.S. § 13-1425 makes it illegal to intentionally disclose the image of an identifiable person in a state of nudity or engaged in sexual activity, when the person has an expectation of privacy, with the intent to harm, harass, intimidate, threaten, or coerce the depicted person. Some important things to note, “image” includes photos, videos, and other digital recordings; and to “disclose” an image means to display, distribute, publish, advertise, or offer.

Offer. Just offering to share revenge porn could be a crime.
Let that sink in for a minute.

The Penalties
If you are convicted of revenge porn using electronic means (email, text message, or social media) under this new law, it’s a Class 4 felony, which is punishable by 1.5 years in prison and a fine up to $150,000.

If you’re convicted of threatening to post/share revenge without actually disclosing the image, that’s a Class 1 misdemeanor, punishable by 6 months in prison and a fine up to $2,500.

Additionally, it will be up to the judge’s discretion to declare whether your crime makes you a registered sex offender.

These are significant punishments for actions taken when you’re merely pissed off at an ex. It’s not worth the risk when the consequences are this severe.

What if I Sext Someone a Naked Picture?
One question I’m frequently asked is if someone texts or emails you a naked selfie, whether you can post that image online. If someone sends you an explicit image, they have not relinquished their expectation of privacy. If you post that image online or share it with others, it could be criminal revenge porn.

If you believe you are the victim of revenge porn or threatened revenge porn, contact law enforcement for assistance. I’m curious to see the outcomes of the first cases tried in Arizona under this new law. If you have questions about social media law or internet privacy that you want to discuss with me, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Treat your Blog as a Business

Office Hours by Tanel Teemusk from Flickr (Creative Commons License)

Office Hours by Tanel Teemusk from Flickr (Creative Commons License)

If you are making money from your blog, or you want to make money from your blog, you have a business. Treat it like the business that it is. You are no longer a hobbyist; you’re an entrepreneur.

Form a Business Entity
Creating a business entity is a relatively straightforward process. In general, it takes paperwork and money. Check with your state’s corporation commission or the secretary of state office to determine how much it will cost – because they significantly vary from state to state. If you have questions about whether you should form a limited liability company (LLC) or a corporation or whether you should form your business in your home state or elsewhere, as your accountant. Most clients I work with in Arizona opt to form Arizona LLCs.

The purpose of having a business entity is to protect you (the person) from liability. With a proper business entity, if the company gets sued, only the business assets will be on the line. Your personal assets (home, car, stuff, dog, etc.) will not be at risk.

Separate Bank Account and Credit Cards
You begin to protect yourself from liability by forming a business entity. The way you perfect that protection is by having separate bank accounts and credit cards for the company. You need to have a clear delineation between where you the person ends and the business begins. This often referred to as maintaining the “corporate veil.”

When you receive money as income, make sure business income passes through the business accounts. Additionally, when you spend money, use your personal accounts to pay for personal expenses (mortgage, groceries, etc.) and use the business accounts to pay for business expenses (office supplies, webhosting, etc.). To steal a line from Ghostbusters, “Don’t cross the streams.”

See your Accountant
Unless you’re a CPA, no entrepreneur should do their own taxes. You can probably make more money if you take the time you would need to do your own taxes to work on your business while someone else does your taxes for you. Having an accountant has saved me a lot of time and headaches. A good accountant is worth their weight in gold.

I love my accountant. He makes doing my taxes so easy. He’s been there to answer all my questions about what can and can’t claim as business expenses and what other information I should track, like mileage.

If you’re new to operating your blog as a business, or if you’ve been doing everything on your own up to now, do yourself a favor and hire a lawyer for an hour. Have a consultation to educate yourself about the legalities of running your business. As an entrepreneurial blogger, you want to be familiar with business formation, contract basics, privacy, copyright, trademarks, and the FTC rules regarding promotions and product reviews. There is a lot to know, but it’s not so complicated that a lay person can’t grasp and apply the concepts.

If you want more information about the legal rules regarding your blog and social media, please check out The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me about social media law, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that’s shared only with my mailing list, by subscribing to the firm’s newsletter.

Five Ways to be Legal Killed for your Blog

Batgirl on Jersey Ave. (behind bars) by margonaut from Flickr (Creative Commons License)

Batgirl on Jersey Ave. (behind bars) by margonaut from Flickr (Creative Commons License)

Yes, you can be legally killed because of something you post on your blog – just not in the United States. As a social media attorney, I deal with a lot of situations involving people behaving badly online, but none of them amount to circumstance where a post can result in crime punishable by death.

There are crimes you can commit via your blog that are punishable by death in certain countries:

Witchcraft: Saudi Arabia

Membership in the Muslim Brotherhood: Syria

Homosexuality: Afghanistan, Iran, Yemen

Atheism: Afghanistan, Iran, Mauritania, Pakistan, Saudi Arabia, Sudan, The Maldives

Opposing the Government/Treason: Bahrain, Belarus, China, Egypt, Ethiopia, Gambia, India, Libya, North Korea, Singapore, South Sudan, Sudan, Syria, United Arab Emirates

This list makes me nervous for travel bloggers, including my friends The Opportunistic Travelers who trek all over the world. If you hit the authority’s radar in the wrong country, it could lead to some serious consequences – such as being caned in Singapore for graffiti. Before you pack your bags for your next adventure, make sure you research the laws that impact your actions in real life and online.

If you want more information about the legal rules regarding your blog and social media, please check out The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that’s shared only with my mailing list, by subscribing to the firm’s newsletter.

Using Others’ Content – Legal Dos & Don’ts

Cut Copy Paste by Arthit Suriyawongkul from Flickr (Creative Commons License)

Cut Copy Paste by Arthit Suriyawongkul from Flickr (Creative Commons License)

I’ve received a lot of questions lately about how and when it is permissible to use other’s content without committing copyright infringement. This aspect of the copyright law is called fair use, and it’s a murky gray area. Each situation needs to be evaluated based on its merits as there few black-and-white rules regarding the legal use of others’ content.

Sharing a Post
If you like a post, you may want to share it with others. The legal way to do this is share a link to the original post with your audience. Sharing a link is the digital equivalent of pointing at something. It doesn’t create a copy of it. You will likely be accused of copyright infringement if you copy/paste the content from the original site to your website. Even if you have good intentions, you’re still interfering with the copyright holder’s right to control where their work is copied and distributed.

If you want to share a copy of a post, ask for permission. I get 2-3 requests a year from people who want to print and share copies of a post I wrote for training purposes or as part of a seminar. I’ve always allowed this as long as they include an attribution so the audience knows where it came from.

Commenting on a Post
If you want to quote someone in a post and add your own commentary to their thoughts, that is generally permissible. This is one of the things fair use is meant to protect. It’s best to quote the original post, provide an attribution and a link to the site, and then add your thoughts about it. By adding commentary, you’re more likely to be contributing to the conversation rather than committing copyright infringement.

One of the questions I was recently asked was whether they could write about the same topic as someone else. There’s no copyright protection for facts or ideas, so as long as you’re not copying someone’s working and claiming it as your own, you can write about the ideas as another writer, even without as attribution – unless you quote them.

Using an Image
This was an interesting question – someone asked when they write a post that comments on another person’s work, can they use the image from the original article. This raises a “red flag” for me because depending on the circumstances, it could be permissible or copyright infringement. If the article is about the image itself, then using the image is likely protected by fair use.

Otherwise using the photo from another’s post may be copyright infringement, especially if readers are seeking the original post and accepting yours as a substitute. I could see readers being confused because the image on the two posts are identical. If the image on the original post is not as essential aspect of the story, I recommend using a different image. I usually get my images from Creative Commons that come with the license to modify and commercialize the original.

Copyright and fair use are complicated issues that permeate the blogosphere. Before using another’s content, consider whether what you’re doing is likely to be legal and whether it might be best to request permission before using another’s content. If you have any question regarding using others’ content and fair use, please contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. If you want access to my exclusive content that’s shared only with my mailing list, please subscribe to the firm’s newsletter.

No Easy Answers in Social Media Law

Math Castle by Gabriel Molina from Flickr (Creative Commons License)

Math Castle by Gabriel Molina from Flickr (Creative Commons License)

Earlier this week I did an interview for Casual Fridays with Tyler Anderson about social media law. I had a great time talking about copyright, trademark, and the FTC rules that apply to social media and the internet in general.

Whenever I do a Q&A on social media law, I tend to get the same types questions over and over again:

  • Can I use any image I find online if I give an attribution and a link to the original? What if I’m not making money off it?
  • I just want to use 10 seconds of a song. Is that ok?
  • If someone sends me a photo, I own it, right? I can do anything I want with it, right?
  • How much do I have to change someone else’s work to qualify for fair use?

As I listened to Tyler’s questions, I realized that he and most social media marketers and entrepreneurs are looking for clear answers. They want things to be as black-and-white as possible, but unfortunately the law is filled with shades of gray, especially in emerging area of law where the technology is advancing faster than the law can keep up.

The best a person can do is to be aware of the basics of copyright, trademark, contract, and privacy laws and assume that there are no easy answers to their questions, even when it seems simple. I also recommend that business owners meet with their lawyers once a year (just like you meet with your accountant) to review their business and standards of practice to make sure that your business is in compliance with the law.

If you want more information about social media law, please check out my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn.

Fair Use Victory!

Bambi vs. Godzilla (211/365) by JD Hancock from Flickr (Creative Commons License)

Bambi vs. Godzilla (211/365) by JD Hancock from Flickr (Creative Commons License)

The Ninth Circuit of the Federal Court handed down an important ruling regarding fair use this week. In Lenz v. Universal, aka the “Dancing Baby” case was about copyright, DMCA takedown notices, and fair use. The Electronic Frontier Foundation (EFF) sued Universal Music Publishing Group after Universal sent a Digital Millennium Copyright Act (DMCA) takedown notice when a mother uploaded a 29-second video of her baby dancing to a Prince song.

The key element of this court ruling is that the court declared that “copyright holders must consider fair use before sending a [DMCA] takedown notice.” Prior to this case, fair use was regarded as an “affirmative defense.” If you’ve seen my YouTube videos, you have seen this one where I declare, “Fair use is a defense, not a permission slip.” This court said that’s not the case, but rather that fair use is authorized by the Federal Copyright Act. There is no copyright infringement if your use of another’s copyright-protected work is permitted by fair use.

If you’re interested in learning more about fair use, I wrote a post that includes a mnemonic device for the fair use factors for a panel I did at Phoenix Comicon on fair use and fan art/fiction.

There are two downsides to the case (at least for now):

  1. Although the court said that copyright holders must consider fair use before sending a DMCA takedown notice, they only have to have subjective good faith belief that the use of the copyrighted work is illegal, even if this belief is objectively unreasonable.
  2. This ruling only applies to the Ninth Circuit. The Ninth Circuit is comprised of Arizona, California, and most of the western United States. However, this ruling is not binding on the other ten Circuit Courts, but they can take it under advisement in future cases.

This case is a step in the right direction and will hopefully lead to fewer abuses of the DMCA. You can read the EFF’s full report about the case here.

Footnote: This case took eight years to reach this ruling. Sometimes pursuing a lawsuit is the right decision, but you have to be prepared to be in it for the long haul.

How the copyright laws apply to the internet is a legal issue that is constantly developing. If you need a resource about how the law applies to social media, please check out The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me about a specific question related to copyright or internet law, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn.